An Indian company vandana Ltd in order to cater to its financial needs wants to issue such an international financial instrument which can be issued only to the American residents. Identify the financial instrument?
Answers
Answer:
Financial instruments may be divided into two types: cash instruments and derivative instruments.
Cash Instruments.
Derivative Instruments.
Debt-Based Financial Instruments.
Equity-Based Financial Instruments.
American Depository Receipts.
Vandana Ltd. wants to cater to its financial needs by issuing an international financial instrument that can only be issued to American residents. The instrument that Vandana Ltd. should issue is American Depository Receipts. American Depository Receipts are issued by the U.S. depository system. It is a negotiable receipt as these are issued to American residents and these receipts enable them to invest their money in overseas companies. Otherwise, these shares are not available. On these receipts, American investors can get dividends but they don't get any voting rights.